Power of reopening an assessment is a power which should be exercised with adequate reason

Last updated: 31 May 2023

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Quick Summary

The Calcutta High Court has quashed a tax assessment reopening notice and subsequent orders, ruling that the opportunity for the assessee to be heard was inadequate. The court emphasised that the power to reopen an assessment must be exercised with sufficient justification and that taxpayers must be given a meaningful chance to respond, especially when the basis for the reopening isn't disclosed. The case was sent back to the initial stage for proper procedure.

Court :
Calcutta High Court

Brief :
The Hon'ble Calcutta High Court in Pramod Kumar Madhogarhia v. The Union of India & Ors. [MAT 729 of 2023 with I.A. No. CAN 1 of 2023 dated May 12, 2023] has set aside the Show Cause Notice ("SCN") issued under Section 148A(b) of the Income Tax Act, 1961 ("the IT Act"), the consequential orders and the order passed by the single bench dismissing the petition of the assessee, on the grounds that the opportunity of being heard provided at first instance should be an effective opportunity, since, the power of reopening an assessment is a ‘power’ which should be exercised with adequate reason.

Citation :
MAT 729 of 2023 with I.A. No. CAN 1 of 2023 dated May 12, 2023

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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